This study investigates the proliferative and osteogenic role of marrow stromal/osteoprogenitor cells in the development of the cortical bone deficit in ovariectomized (OVX) female rats. In vitro, clonal growth of marrow stromal cells from OVX rats was significantly impaired (vs. sham-operated controls). Yet in vivo, cells from sham-operated and OVX rats had equal osteogenic potential in several in vivo experimental situations, such as in intraperitoneally implanted millipore diffusion chambers and in intramuscular implants of marrow plus osteoinductive bone matrix (composite grafts). Long-term (6 mo) dihydrotachysterol (DHT) treatment of OVX rats enhanced their in vitro proliferative potential and clonal growth, as well as their osteogenic expression in composite grafts. The observation that the in vivo osteogenic performance of OVX rat marrow stromal cells was normal at extraosseous sites suggests that the mechanisms leading to osteopenia may involve an abnormality in cell-matrix interactions.